Depending on what the owner seems to be like, which of the choices would be bes

Depending on what the owner seems to be like, which of the choices would be bes

Jun 10th, 2015

SoccerBoss

Category:

Economics

Price: $5 USD

Question description

You
recently acquired a bakery on the main downtown street. There is another bakery not far away. Otherwise, you face no real competition. At this point, you are still unclear about
the personality and management style of the owner of the other bakery. You have contemplated three possible
strategies: (1) produce a lot of cakes and mark down their prices to try to
sell a large quantity; (2) limit your production of cakes, but charge a high
price for them; or (3) politely engage the owner of the other bakery in a
conversation, and consider proposing that the two of you collude on prices and
adjust your production levels accordingly.
Depending on what the owner seems to be like, which of the choices would
be best from the standpoint of profitability?
Discuss the possibilities fully.